-The Historical Returns Data for the Past Three Years for Company

question 13

Multiple Choice

-The historical returns data for the past three years for Company A's stock is -6.0%, 15%,
15% and that of the market portfolio is 10%, 10% and 16%. If the risk-free rate of return is
4%, what is the cost of equity capital (required rate of return of company A's common stock)
Using CAPM?

• A) 18%
• B) 14%
• C) 12%
• D) None of the above

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Definitions:

Wear Out

The phenomenon where repeated exposure to the same advertisement or message leads to decreased consumer response or interest over time.

Influential People

Individuals who have the power to affect the decisions of others due to their authority, knowledge, position, or relationship.

Reality Engineering

refers to the process of influencing or shaping perceptions of reality, often through media, technology, or psychological means.

Promotional Strategies

Marketing efforts designed to communicate the value of a product or service to potential customers in order to increase sales.